Dealer Licensing in Virginia

In the Commonwealth of Virginia, two agencies oversee the licensing of motor vehicle dealers. New and used automobile dealer licensing is handled by the Motor Vehicle Dealer Board, while the Department of Motor Vehicles (DMV) oversees the licensing of motorcycle, trailer, and recreational vehicle dealers.

As this is a highly regulated business, it's not all that easy to become a licensed motor vehicle dealer. You must first decide if you want to deal in automobiles, motorcycles, motor homes, or trailers (or any combination thereof). Then you need to answer the question, "New or used?" Dealers of new cars must have a franchise agreement with the manufacturer. Those who sell only used vehicles are called independent dealerships.

But those decisions are the simple part. In addition to state and local requirements for starting a business, if you are opening a new dealership and are not already licensed, follow the steps below.

How to Apply for a Dealer License

Get your place of business ready. Your business space will have to be inspected before you can receive your license.

Generally, you must first choose a location and meet all state and local zoning regulations. Your dealership must be at least 250 sq ft in size, in a permanent, enclosed building that is not used as a residence.

You must devote sales, service, and office space solely to the dealership and have adjoining space large enough to display at least 10 vehicles.

Finally, your office must be equipped with a desk, chairs, filing space, a working phone in the dealership's name, and working utilities such as electricity and heat. You must also maintain records according to the law.

By law you must display a sign at your place of business with the name of your company in letters at least 6 inches tall. You must also post your hours of operation. Your dealership has to be open at least 20 hours a week, 10 hours of that must be between 9 a.m. and 5 p.m., Monday through Friday.

Complete the required dealer course. These are conducted within the Virginia Community College System by the Virginia Independent Automobile Dealers Association (VIADA) and cost $325 if you register at least 2 weeks before the course date. If you register less than 2 weeks before the start of the course the fee is $375

Pass the dealer-operator and salesperson's test at any DMV Customer Service Center. The exam costs $50 to take. You can download a study guide online. Once you pass this test and become qualified, you may apply for your license with the Motor Vehicle Dealer Board. The qualification certificate you receive in the mail is not a license to buy and sell motor vehicles. When you receive the certificate, however, you can apply for your license and perform limited functions in your business.

Pay the licensing fees, which total about $600 the first time you apply. You will need to pay a Motor Vehicle Transaction Recovery Fund fee of $250 for the first 3 years only.

You may also be interested in signing up for Virginia's Online Dealer Program. The Automated Interface System used by this program allows dealers to title and register vehicles online, and issue documents and license plates to customers at the dealership.

Salespeople at the dealership must also be licensed. In order to apply for a license, each salesperson must be an employee of the dealership (not an independent contractor) and must also pass a licensing test at a DMV Customer Service Center.